Correlation Between Braskem SA and Banco Do
Can any of the company-specific risk be diversified away by investing in both Braskem SA and Banco Do at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Braskem SA and Banco Do into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Braskem SA and Banco do Estado, you can compare the effects of market volatilities on Braskem SA and Banco Do and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Braskem SA with a short position of Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of Braskem SA and Banco Do.
Diversification Opportunities for Braskem SA and Banco Do
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Braskem and Banco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Braskem SA and Banco do Estado in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco do Estado and Braskem SA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Braskem SA are associated (or correlated) with Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco do Estado has no effect on the direction of Braskem SA i.e., Braskem SA and Banco Do go up and down completely randomly.
Pair Corralation between Braskem SA and Banco Do
Assuming the 90 days trading horizon Braskem SA is expected to under-perform the Banco Do. In addition to that, Braskem SA is 2.09 times more volatile than Banco do Estado. It trades about -0.39 of its total potential returns per unit of risk. Banco do Estado is currently generating about -0.21 per unit of volatility. If you would invest 1,262 in Banco do Estado on August 30, 2024 and sell it today you would lose (58.00) from holding Banco do Estado or give up 4.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Braskem SA vs. Banco do Estado
Performance |
| Timeline |
| Braskem SA |
| Banco do Estado |
Braskem SA and Banco Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Braskem SA and Banco Do
The main advantage of trading using opposite Braskem SA and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Braskem SA position performs unexpectedly, Banco Do can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Banco Do will offset losses from the drop in Banco Do's long position.| Braskem SA vs. G2D Investments | Braskem SA vs. New Oriental Education | Braskem SA vs. Apartment Investment and | Braskem SA vs. The Trade Desk |
| Banco Do vs. Banco do Estado | Banco Do vs. Banestes SA | Banco Do vs. Banco do Estado | Banco Do vs. Banco Santander SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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